IRDA proposes sweeping changes in health insurance (Cafe Mutual 3rd June 2012))

The regulator proposes to extend the age limit to 65 years for availing a health insurance policy and lifetime renewability.  

IRDA’s objective for extending the age limit is cover more senior citizens under health insurance.  Also, insurers would have to provide cashless facility to policyholders undergoing treatment in a particular hospital even if it is removed from the list of preferred service providers.

The guidelines seek to address the problems of the health insurance sector which came into light in 2010 after four public sector insurers removed private hospitals from their preferred list citing over charging by them under the cashless scheme. In addition, the regulator has proposed the following key changes:

Cap on policy term – Health policies offered by life insurers should have a minimum term of four years. On the other hand, any health product from general insurance companies will have a minimum term of three years.

Critical Illness and claim settlement – IRDA in its exposure draft has defined critical illness properly. Henceforth, no insurer can deny any claim on grounds of non availability of definition for critical illness.

If a policy holder has more than one health insurance policy, they can get the claim settled completely by any one of the insurers. It is left to the companies to settle the bill amongst themselves later.   

Eligibility for insurance - Non-allopathic treatment in any government recognised hospital will also be eligible for insurance.

Reimbursement Policy - Policy holders will get a full refund for the medical test they undertake before taking a policy. The medical reimbursement can be availed at 50% for non-life and 100% for life.

Hospitals that policyholders can visit – Policy holders can go to any hospital for any health issues and won’t have to go through a booklet provided by the insurer to find out which hospital has an agreement with their insurer. IRDA has also sought more clarity from insurers at the time of policy issuance and settlement. A standard policy form will be issued, which will highlight important policy details of the customer.

Combi Products- According to the regulator ‘Combi Products’ can be sold through “direct marketing channels, brokers, composite individual and corporate agents, common to both insurers.”

The draft further said, ‘Combi Products’ are not allowed to be marketed through bank referral arrangements. Insurers shall ensure that the product is not marketed by those insurance intermediaries who are not authorized to market either of the products of either of the insurers.”

Besides distribution, the draft also mentions that since the product is jointly offered by a non life insurer and life insurer, specific name of the non life and life insurer should be properly mentioned.